CIT Group Inc. (NYSE:CIT), operating in the financial services industry based in United States, led the NYSE gainers with a relatively large price hike in the past couple of weeks. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Today I will analyse the most recent data on CIT Group’s outlook and valuation to see if the opportunity still exists.
What’s the opportunity in CIT Group?The stock is currently trading at US$50.53 on the share market, which means it is overvalued by 26.37% compared to my intrinsic value of $39.99. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Since CIT Group’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will CIT Group generate?Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 6.9% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for CIT Group, at least in the short term.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in CIT’s future outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe CIT should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on CIT for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on CIT Group. You can find everything you need to know about CIT Group in the latest infographic research report. If you are no longer interested in CIT Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.